Nifty has to close above 8,050 for the market to move higher
The Indian stock market on Monday was range-bound and closed marginally higher without any big rallies in important shares. Inflation data and the index of industrial production (IIP) announced by the government today were positives. Both Indian benchmarks, the NSE’s CNX Nifty and S&P BSE Sensex closed Monday at 8,013.90 or 0.39% up and at 26,586.55 or 0.61% up, respectively. Nifty opened the day at 7,986.60, reached a high of 8,057.70 and touched a low of 7,944.85. Sensex opened at 26,498.67, reached a high of 26,728.60 and touched a low of 26,307.84. India Vix was at 17.5250, up 0.27%. NSE volumes were at 63.34 crore in Monday’s trading.
According to the data released by the Indian government, core inflation has declined to -0.6% in May 2015 from -0.5% in April 2015. The Wholesale Price Index (WPI) based inflation inched up slightly to -2.4% in May 2015 compared with -2.65% in April 2015. Inflation for March 2015 has been retained unchanged at -2.33%. However, the WPI inflation remained in the negative zone for the seventh straight month in May 2015.
Inflation declined for primary articles and manufactured products, but an increase in inflation for fuel items mainly contributed to the entire rise in overall inflation in May 2015. Inflation of manufactured products declined to -0.6% in May 2015 from -0.5% in April 2015. Inflation of primary articles fell from -0.3% in April 2015 to 0.8% in May 2015. Fuel products inflation increased to -10.5% in May 2015 from -13.0% in April 2015.
While inflation data is positive for the economy, monsoon and agriculture news is less encouraging. India's farm economy could contract this fiscal year for the first time in over a decade because of drought, threatening Prime Minister Narendra Modi's drive to lift millions in the countryside out of poverty and bolster his party's support. Roughly, half of India's farmland lacks irrigation and relies on monsoon rain, but this year's rainfall is officially forecast to be only 88% of the long-term average and, for the first time in nearly three decades, farmers face a second straight year of drought or drought-like conditions. This comes on top of a crash in commodity prices, unseasonable rain earlier this year and delayed sowing late last year because of scanty monsoon rain.
On the issue of Cairn-Vedanta merger, Moody's Investors Service has said that Vedanta's (unrated) proposed merger with Cairn India (unrated) is credit positive for Vedanta Resources Plc (Ba1 negative). However, improved liquidity, lower advantage and reduced subordination within the group could lead to ratings being stabilised or current notching between the corporate family rating and the Ba3 bond rating being reviewed upon successful completion of the merger, it said. If the merger proceeds - subject to regulatory approval, in a cashless all-stock transaction - minority shareholders would receive one equity share and one 7.5% preference share in Vedanta for every share held in Cairn India.
Regarding exports from the service sector, there is news that the US government is investigating an outsourcing contract involving utility firm Southern California Edison and India's largest software exporters, Tata Consultancy Services (TCS) and Infosys, similar pacts signed now or recently are coming under the scanner, say reports. The latest contract to be scrutinised is one with Walt Disney, which recently signed a deal with US-based Cognizant Technology Solutions. Other recent deals with companies like Fossil are also being investigated, people familiar with the probes said. Industry body Nasscom said an investigation could have long-term ramifications on future contracts between US corporations and Indian IT firms.
There was some speculation in the forex market based on news from Greece. Most emerging Asian currencies slid on Monday after Greece and lenders failed to reach an agreement to prevent the country's default, while caution mounted ahead of a US Federal Reserve meeting, which could offer clues on the timing of a rate hike. The Philippine peso hit a 15-month low on concerns over more capital outflows. The Singapore dollar extended losses after the city-state reported the first quarterly decline in jobs in nearly six years.
Coming back to Indian stock markets, Idea Cellular (up 3.20%) was the top gainer among Nifty stocks closing at Rs175.90. The top loser among Nifty stocks was Power Grid Corp, which declined 2.85% to Rs141.25.
Among BSE-100 stocks, the top gainer was JP Associates up 9.30% to close at Rs11.75 and the top loser was Bank of Baroda down 2.75% to close at Rs143.
European indices were trading sharply lower with FTSE 1.09%, Dax down 2.04%, on fears of default in Greece.
US Futures were trading in the red.